Tax Credits sought to rehabilitate work force rental housing
KALAMAZOO, MI — A nonprofit is seeking state and local tax incentives to rehabilitate an apartment complex serving low-income tenants.
Summit Park Apartments is owned by Housing Resources, Inc., but a purchase agreement is being worked on with Full Circle Communities, Inc. so HRI can concentrate on providing support services. Full Circle Communities, a nonprofit with properties in three states, would maintain and rehabilitate 33 affordable rental units in the northwest part of Kalamazoo.
Full Circle Communities is seeking a low-income housing tax credit from the Michigan State Housing Development Authority. Last week, the Kalamazoo City Commission approved a payment in lieu of taxes (PILOT) for 35 years, the length of the new mortgage.
Here’s the deal: Kalamazoo will lose out on almost $67,000 from 2019-2054 to keep the apartments available for low-income tenants.
It’s the same as a 20-year break HRI was given in 1999 after the apartments were built at 1117 Summit Ave.
Keeping affordable housing units available and building new ones are part of larger strategies the city of Kalamazoo is working on to increase housing options for marginalized residents.
The renovations are needed too, said Life Walker, an office manager at Summit Park. All the units are in some state of disrepair.
“It’s all about preservation,” said HRI Executive Director Michelle Davis. “I think the city and the county in general are talking about the need for more affordable housing and I think that’s great. While HRI is looking at its current properties and how we maintain and keep those units, we will also go into strategic planning this spring (to discuss) redefining our role in development.”
It can be financially difficult for property managers to offer units at 30 percent of a person’s income — the standard the U.S. Department of Housing and Urban Development uses to describe “affordable” — Commissioner David Anderson said during a broader discussion about low-income housing.
Kalamazoo can help leverage affordable housing projects by offering PILOT incentives.
Chuck Vliek, vice president of the Local Initiative Support Corp., emphasized the impact quality mixed-income housing can have on the city’s north side. Income integration supports nearby retail and commercial business, and that’s how a neighborhood bounces back.
If the state tax credits are awarded, and the rental units remain affordable for low-income people, the city’s PILOT would take effect next year.
Units will have rents ranging at 30 percent, 50 percent or 60 percent of area median income, according to a city staff report. Seven will have rental assistance through MSHDA.
Today, all units are rented by people at 40 percent of the area median income.
According to a proposal to the city, rents won’t change for current tenants. Instead, the new rental rates will be applied to vacant units and when units turnover.
Almost three-quarters of the units would have two bedrooms, with monthly rents ranging from $396 to $891.
Full Circle Communities plans to add two units to the property and a computer resource center, library and child play area. It also seeks to make the site more accessible for people with disabilities and upgrade kitchens, bathrooms, flooring, landscaping and parking areas.
Davis said the plan is to make the units “like-new.”
Plans also call for improving energy efficiency and stormwater management features.
The project will retain affordable rental apartments designed as an integrated permanent supportive housing population, which combines low-barrier affordable housing, health care, and supportive services to stabilize tenants.
Seven tenants will be supported through existing project-based Section 8 rental assistance from MSHDA. Twenty-five units are designed to serve low-income individuals and families.
There will also be one residence for an employee.
Full Circle Communities received its first MSHDA tax credit in 2018, for a 75-unit integrated permanent supportive housing project in Portage. The proposed Selinon Park project is expected to begin construction in fall 2018 and open next year.
In total, Full Circle Communities has an ownership interest in 810 units in Illinois, Florida and Michigan, with 61 units currently under construction.
The nonprofit expressed a commitment to expanding access to quality affordable housing in urban areas.